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Sullivan v. Cherewick

Supreme Court of Montana

February 28, 2017

MICHAEL SULLIVAN; JOY W. HUNT; DR. HERSCHEL R. and MARY BETH HARTER, Plaintiffs,
v.
THOMAS CHEREWICK and RONALD M. HENRY, Defendants. RONALD M. HENRY, Counterclaim Plaintiff, and WESTERN INVESTMENTS, INC., Third-Party Plaintiff, Counterclaim Plaintiffs and Appellants,
v.
MICHAEL SULLIVAN; JOY W. HUNT; DR. HERSCHEL R. and MARY BETH HARTER, Counterclaim Defendants and Appellees.

          Submitted on Briefs: January 11, 2017

         APPEAL FROM: District Court of the Twenty-Second Judicial District, In and For the County of Carbon, Cause No. DV 11-122 Honorable Blair Jones, Presiding Judge

          For Appellants:Paula Saye, Saye Law, Absarokee, Montana (for Ronald M. Henry and Western Investments, Inc.) T. Thomas Singer, Frederick P. Landers, Axilon Law Group, PLLC, Billings, Montana (for Thomas Cherewick and Ronald M. Henry)

          For Appellees: Michael B. Anderson, Anderson & Liechty, P.C., Billings, Montana (for Dr. Herschel R. and Mary Beth Harter), Brendon J. Rohan, Poore, Roth & Robinson, P.C., Butte, Montana (for Michael Sullivan), John F. (Jack) Jenks, J. Wayne Capp, Capp & Jenks, P.C., Missoula, Montana (for Michael Sullivan, Joy W. Hunt, Dr. Herschel R. and Mary Beth Harter), Paul N. Tranel, Katie C. Guffin, Bohyer, Erickson, Beaudette & Tranel, P.C., Missoula, Montana (for Joy W. Hunt)

          OPINION

          BETH BAKER, JUSTICE

         ¶1 The parties have been engaged for years in a contentious dispute regarding the management of a real estate development in which they all owned property. The Plaintiffs sued to restrain Thomas Cherewick and Ronald Henry from actions that Plaintiffs alleged were unauthorized or exceeded their authority as directors and officers of the development's property owners' association.[1] Henry and his company, Western Investments, Inc., counterclaimed, alleging that Landowners had conspired to interfere with his business. The District Court granted summary judgment against all parties on their respective claims. It entered a final judgment, declining to award attorney fees and costs to Henry and Cherewick. There are two issues on appeal:

1. Whether the District Court erred in granting Landowners summary judgment on Henry's and Western Investments' counterclaims for conspiracy and other alleged tortious conduct;
2. Whether the District Court abused its discretion in denying Henry's and Cherewick's motion for attorney fees after they prevailed on the Plaintiff's claims against them.

         ¶2 We affirm.

         PROCEDURAL AND FACTUAL BACKGROUND

         ¶3 This case has a contentious history, consuming nearly five years in litigation, with almost 600 documents in the District Court record, five separate summary judgment orders, and eleven briefs from various arrangements of parties covering two distinct claims on appeal. The District Court described it as "a muddled and chaotic case . . . [in which] neither Plaintiffs nor Defendants substantially prevailed on any of the asserted claims and counterclaims."

         ¶4 Henry, Cherewick, and Landowners all owned property in Remington Ranch-a real estate development comprising several subdivisions outside of Red Lodge, Montana. Henry developed much of Remington Ranch through his company Western Investments. Western Investments owned numerous lots in Remington Ranch. Western Investments purchased Dr. Herschel and Mary Beth Harters' interest in a tract of land in one of the subdivisions. In exchange, Western Investments gave the Harters a promissory note for $750, 000. After Western Investments failed to make any payments on the note, the Harters filed a UCC-1 Financing Statement and vendor's lien on certain lots that Western Investments was trying to sell.

         ¶5 The Remington Ranch Association (Association) is an "umbrella" property owners' association. It is responsible for maintenance of the common areas of the subdivisions that make up Remington Ranch. While each individual subdivision within Remington Ranch has its own declaration of covenants, conditions, and restrictions, the Association also has its own declaration of covenants, conditions, and restrictions. Landowners are all members of the Association, and Henry and Cherewick were directors and officers of the Association.

         ¶6 The breaking point in a longstanding period of discord between the parties came when Henry announced that he was going to try to develop part of the property as a resort. Landowners reacted to Henry's announcement by organizing and discussing their options for preventing commercial development. Ultimately, Landowners-along with about twenty other Remington Ranch property owners-filed a complaint against Cherewick, Henry, the Association, and Association director Nancy Gammill.[2]Landowners challenged the Association's authority over the affairs of Remington Ranch's component subdivisions. Landowners also claimed that Henry and Cherewick took actions that were either unauthorized or exceeded their authority as directors.

         ¶7 Henry and Western Investments brought several counterclaims against Landowners, including defamation, tortious interference with business relations and prospective economic opportunity, negligent or intentional infliction of emotional distress, slander of title, abuse of process, and civil conspiracy. The basic premise of the counterclaims was that Landowners colluded to drive Henry into bankruptcy, to stop his planned commercial development of the site, and to ruin his reputation in the community. Henry and Western Investments also sought punitive damages.

         ¶8 Over the course of nearly five years, the parties engaged in extensive discovery and litigated their various claims and counterclaims through dozens of motions. In the end, the District Court entered summary judgment orders granting judgment to Henry and Cherewick on Landowners' claims. The court also granted Landowners summary judgment on Henry's and Western Investments' counterclaims because it concluded that Henry and Western Investments failed to produce evidence establishing each of the elements of the counterclaims. Finally, the court denied Henry's and Cherewick's motion for attorney fees and costs on Landowners' claims because it determined that they were not a prevailing party. Henry and Cherewick appeal the court's refusal to award attorney fees; Henry and Western Investments appeal the dismissal of their counterclaims.

         STANDARDS OF REVIEW

         ¶9 We review summary judgment rulings de novo, applying the standards set forth in M. R. Civ. P. 56(c)(3). Bird v. Cascade Cnty., 2016 MT 345, ¶ 9, 386 Mont. 69, 386 P.3d 602. Summary judgment is appropriate when the moving party demonstrates both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law. M. R. Civ. P. 56(c)(3); Bird, ¶ 9. Once the moving party has met its burden, the opposing party must present material and substantial evidence to raise a genuine issue of material fact. Bird, ¶ 9. We will draw all reasonable inferences from the offered evidence in favor of the party opposing summary judgment; but conclusory statements, speculative assertions, and mere denials are insufficient to defeat a motion for summary judgment. Bird, ¶ 9. We review a district court's conclusions of law to determine whether they are correct. Bird, ¶ 9.

         ¶10 We review a district court's conclusion regarding the existence of legal authority to award attorney fees for correctness. City of Helena v. Svee, 2014 MT 311, ¶ 7, 377 Mont. 158, 339 P.3d 32. If legal authority exists, we review a district court's order granting or denying attorney fees for abuse of discretion. Svee, ¶ 7. We review a district court's determination of "prevailing" or "losing" parties for abuse of discretion as well. Whipps, L.L.C. v. Kaufman, Vidal, Hileman, & Ramlow, P.C., 2007 MT 66, ¶ 6, 336 Mont. 386, 156 P.3d 11. A district court abuses its discretion when it acts ...


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